Solvency II Journey 'Only Just Beginning'

With Solvency II now in place as the European insurance industry's regulatory regime, the European Insurance and Occupational Pensions Authority (EIOPA) is shifting its focus to supervisory convergence, with a new information system under development, according to Gabriel Bernadino, chairman of EIOPA.

Insurance firms (and their asset managers) have spent the past six years preparing for Solvency II reporting and now, as of January 1, the directive is in place in EU member states. Reporting data to national authorities begins in April.

But with the deadline passed, the supervisory journey has only just begun, according to Bernadino. "As of January 1, the first – regulatory – journey of EIOPA will be practically completed. But the new, more challenging supervisory journey will only begin. Good regulation is just a first step. The second step – and actually an even more crucial one – is its implementation."

Bernadino says that EIOPA is key to this next step: "Only a European supervisory authority is capable of ensuring the consistent and convergent implementation of the new regulatory framework across the EU. That is why for the past two years we have been preparing for the shift of our strategic focus from regulation to supervisory convergence."

Solvency II is intended to harmonize reporting across European countries in order to provide a level playing field and reduce regulatory arbitrage, and now the data will also provide supervisors with a better view of systemic risk.

Bernadino says EIOPA's comprehensive information system is "a strategic asset, allowing [EIOPA] to further develop the capacity to provide reliable risk analysis and early warning indicators at individual, group and system level."

An EIOPA spokesperson says the IT infrastructure to provide this information hub is under development, with a strong emphasis on information security.

Bernadino says this work will enable EIOPA to furnish national supervisers with data, enabling their better knowledge of their own markets. "This will reinforce the quality of both micro- and macro supervision in the EU," he concludes.